Chapter 20, 21, 24

unincorporated, owned by one person

formation, taxes

no taxation at the business level, doesn't pay income taxes on profits but instead passes them through to owners who pay personal income taxes

liability, limited capital, duration, transferability

owner is personally liable

limited liability, transferability, duration

can't lose more than your investment, managers and investors are protected from personal liability

logistics (cost and effort), taxes

double taxation, taxed at entity level and investor level

limited liability, flow-through taxes

one class of stock, no more than 100 shareholders who can't be partnerships, corporations, or nonresidents, must agree that company should be an s corp

limited liability, unfavorable tax structure

small number of shareholders who are active in management, stock isn't public

protection of minority shareholders, flexibility

dispute resolution, transferability

best parts of sole proprietorship and corporation

formation, limited liability, flexibility, flow-through taxes, duration

charter required, harder than a sole proprietorship but easier than a corporation

no requirement for meetings or types of shareholders

transferability, going public

can't transfer ownership or add a new member without unanimous approval

it's not beneficial and changes tax status

court holds members personally liable for the debts of an organization

failure to observe formalities, comingling assets, inadequate capitalization, fraud

pledge to behave in a socially responsible manner as they pursue profits

unincorporated, two or more co-owners

flow-through taxes, formation

automatic if two or more people share a business

joint and several liability, transferability

each partner is personally liable for debts

partners must agree on a transfer of ownership

non-partners are treated as partners and forced to share liability

they tell people they're partners, a third party relies on that, third party suffers harm

equally share profits, losses, and rights unless agreed otherwise

have primary management responsibility

only from contributions from partners or borrowing

terminating a partnership, dissolution, winding up, termination

business can't continue due to a partner leaving and others can't unanimously agree to continue, all partners agree to end it, business becomes illegal

all debts are paid and remaining proceeds go to partners

automatic after winding up

limited liability, taxes

statement of qualification with state officials, annual reports

limited liability of a corporation

all shareholders must be members of the same profession, expensive and time consuming legal steps to form and maintain, complicated tax issues

partnership for a limited purpose, not a form of business

not a form of business

owning a business, support

control (very little), cost

must be delivered to a potential purchaser, includes all information about franchise

personally liable for any contract signed before the corporation is formed

organizes a corporation

agree to be bound by a contract's terms

a new contract

no matter where a company does business, it can incorporate in any state

within the state that it's incorporated in

outside of the state it's incorporated in

advantages for incorporating

flexible laws that favor management, efficient court system, established body of law, neutral arena

articles of incorporation, includes name, address, registered agent, purpose, incorporator, stock

official presence in the state

relevant to liability issues, can lose liability protection if an activity is outside of the corporate purpose

signs the charter and files it with secretary of state

par value, number of shares, class and series

minimum amount a share can be sold for, most corporations set it low

categories of stock with different rights

partners have a fiduciary duty

directors and officers have a fiduciary duty to the corporation and shareholders

special trust to put the needs of the corporation and shareholders above their own

elected by shareholders, must have one unless there is less than 50 shareholders or they vote to not have a board

elected by board, same person may have two offices

managers aren't liable for decisions made in good faith without conflict of interest, with the care that an ordinary person would take, in a manner reasonably believed to be in the best interest, regarding duty of loyalty/care

disinterested members and shareholders approve it, or they don't approve but a court says it was reasonably fair

organizational rules

record of official actions

business idea fails, shareholders vote to terminate, forced to terminate by court order

court holds shareholders personally liable for the debts of the corporation

failure to observe formalities, comingling of assets, inadequate capitalization, fraud

shareholders didn't put enough money into the corporation to treat it as a separate entity

shareholder vote, articles of dissolution, winding up

no right or obligation to manage day to day business

large stock, wants to influence management and strategy

advise shareholders on how to vote

shareholders have a right to see and copy minutes, records, and the shareholder list

aids shareholder in managing and protecting her investment

dissolution, charter or bylaw amendments, mergers, sale of assets

must buy back at fair value the stock of any shareholder to objects to a large decision

appointed by shareholder to vote for her

financial information that public companies provide

have less than majority support from shareholders

not company employees

are also company employees

must be unrelated to ordinary operations and can't be binding on the company

shareholder sues for rights being harmed

brought by shareholders to remedy a wrong to the corporation

shareholders ask board to authorize litigation on behalf of the corp

cheaper, paid last upon termination

pricier, paid first upon termination

right to prevent others from making, using, or selling one's invention for a limited time

protects appearance, not function

can patent a type of plant

protects functionality, most common

novel, nonobvious, utility, patentable subject matter

US Patent and Trademark Office

can file infringement lawsuit if someone infringes on your patent rights

protects original/creative work, gives creator exclusive right to reproduce, distribute, and perform his original work for a limited time

until 70 years after creator's death, longer duration than other IP types

must prove that the infringer copied the work and had access to the original and the two works are clearly similar

first sale doctrine, fair use doctrine

allows you to sell something that you originally purchased

permits limited use of copyrighted material without permission for reporting, criticism, teaching, etc

words and symbols that a business uses to identify its products and services

trademarks, service marks, certification, collective marks

protect a service

certifies that the product is good, ex: BBB

represents a group, ex: girl scouts

fanciful and arbitrary, suggestive, descriptive

blurring and tarnishment

lessening of a capacity to identify

association with unwholesome goods or services

a formula, device, idea, or process that gives a business a competitive edge